Trump's Nvidia China Deal: Why H200 Chip Sales Face Scrutiny Amid Low Demand

According to Axios, Nvidia has received approval to sell its H200 chips to China, with the US government set to receive a 25 per cent share of all sales. The H200 is a significant improvement over the H20, the downgraded model Nvidia was required to develop under earlier export restrictions and which China mostly rejected.

Trump described the approval as a reversal of the previous administration's policies, writing on Truth Social, "The Biden Administration forced our Great Companies to spend BILLIONS OF DOLLARS building 'degraded' products that nobody wanted, a terrible idea that slowed Innovation, and hurt the American Worker."

Axios noted that while the H200 is the most advanced chip Nvidia is currently allowed to sell in China, it still lags a full generation behind the firm's latest Blackwell chips. Beijing, which is focused on expanding its own semiconductor industry, is also not expected to rush to purchase the newly approved hardware.

Citing the Financial Times, Axios reported that Chinese regulators may limit access to the H200 by requiring buyers to justify why domestic chips cannot meet their needs.

Nvidia CEO Jensen Huang has expressed uncertainty about China's interest in the H200, saying he was unsure whether it would be accepted. Investor reaction appeared subdued as well, with Nvidia's stock closing down 0.3 per cent on Tuesday, Axios added.

In another report, Axios highlighted concerns from critics who fear the sale of H200 chips could help China advance its semiconductor capabilities by accessing US technology. However, the practical impact may be reduced because China already possesses large quantities of Nvidia chips acquired during the export restrictions.

The Financial Times reported earlier that more than USD one billion worth of banned chips had entered China through black market channels.

On Tuesday, US prosecutors announced they had disrupted a China-linked smuggling network trafficking more than USD 160 million in restricted Nvidia chips, including H200 units.

In its indictment, the US Attorney's Office warned that the chips entering China risked "compromising America's technological edge" in AI and threatening national security, Axios reported.

According to Axios, although Nvidia has long pushed for permission to sell H200 chips in China, the move currently appears unlikely to deliver significant strategic or commercial benefits for the company -- or for either side of the broader geopolitical competition.

- ANI